CRE in DC

[Anonymous]

More re: CRE, seems like the crash is imminent

[Anonymous]

Cue the idiots ready to come in and cheer on mixed use housing without having a clue on the tax implications and the complete lack of resources downtown.

[Anonymous]

This discussion has gems like being willing to share kitchens and bathrooms in buildings converted to residential to get around issues with plumbing, etc. Doubt many share that view, lol. Like a boarding house but $$$.

https://www.reddit.com/r/washdc/comments/19fkeyf/shocking_plunge_in_office_values_reveals_depth_of/

[Anonymous]

Reddit link has link to full article.

[Anonymous]

Yikes

‘Enormous Implications For Everybody’

As it becomes clear just how far office values are falling, a better picture is also forming of just how deep the ramifications could be for all Washingtonians.

A significant share of the District's budget is on the line. About 15% of the city’s revenue comes from commercial properties, according to the Urban-Brookings Tax Policy Center. Sinking revenue means less money for everything from police officers to schools to the Metro and pothole repair.

“Everyone stands to lose,” D.C. Policy Center Executive Director Yesim Sayin said. “Tax revenue pays for government support and services that all D.C. residents need or use. So that is a very, very disconcerting, very nerve-wracking picture for me.”

In its most recent revenue estimate, the OCFO last month projected commercial revenues would drop every year for the next four years. While the District received nearly $1.7B in tax revenues from occupied commercial buildings in 2022, the OFCO predicted that figure would be $136M lower in 2027. The report says continued office market decline would pose an added risk to the outlook.

“If you look at the CFO’s forecast, you can see that we’re feeling the pain,” Loh said. “This isn’t a subject that’s up for debate.”

But the costs to the city don’t stop at commercial tax revenues. Loh said it will be important to watch the “second-order effects” from the office disruption, like a decline in fares for the transit system and falling downtown sales tax revenue, factors that could additionally hinder D.C.’s finances.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

The tax on CRE is double that of residential real estate. This is actually a huge problem.

It is a huge tax revenue problem. Tax revenue pays for the bike lanes, pickleball, etc. that young people enjoy.

Increase the residential real estate tax. No one would dare leave.

[Anonymous]

Anonymous wrote:It’s a disaster. Not just for CRE, but residential too as their highly paid workers find the commute from upper NW to Reston cumbersome.

Fannie Mae's charter, unlike Freddie Mac's, requires them to maintain their corporate head office in DC proper. It'd take an act of Congress to modify that. We all know how productive Congress is these days.

[Anonymous]

Of course people might leave if taxes rise, esp as crime continues to be a concern. What is the point you are trying to make?

[Anonymous]

DC has some of the lowest property taxes in the Region, so they have room to increase taxes to makeup or much of the lost CRE revenue. Even with modest increase to their property tax, the overall tax burden will still be quite a bit less than Maryland.

[Anonymous]

Ugh this is depressing

[Anonymous]

Anonymous wrote:DC has some of the lowest property taxes in the Region, so they have room to increase taxes to makeup or much of the lost CRE revenue. Even with modest increase to their property tax, the overall tax burden will still be quite a bit less than Maryland.

The problem with this is that DC could end up mimicking Baltimore with its very high tax rates, which pushes away potential residents.

DC needs to crack down hard on crime ASAP.

[Anonymous]

Anonymous wrote:BIG tax hit for DC but their well paid employees also help support a lot of downtown businesses.

Are DC government workers as flush or as likely to do spend downtown during the work day and after work?

Most DC government workers aren’t downtown, just an agency or two, so they can’t really help.

[Anonymous]

As far as commercial real estate, the biggest challenge for DC is and will continue to be the height restrictions. Building in DC requires a much larger and mor costly property footprint to achieve a given amount of square footage compared to say, Tyson’s; and, in general, building on existing property in such close proximity to existing construction, is more difficult and expensive. There’s certainly some additional prestige from being located in DC vs. Tyson or Reston, but it’s a tough sell for companies that want to reduce their costs, and who see more employees and more employees working from home.

[Anonymous]

Anonymous wrote:As far as commercial real estate, the biggest challenge for DC is and will continue to be the height restrictions. Building in DC requires a much larger and mor costly property footprint to achieve a given amount of square footage compared to say, Tyson’s; and, in general, building on existing property in such close proximity to existing construction, is more difficult and expensive. There’s certainly some additional prestige from being located in DC vs. Tyson or Reston, but it’s a tough sell for companies that want to reduce their costs, and who see more employees and more employees working from home.

You don't think it will be vacancies?

[Anonymous]

Changed financial realities are dawning for some...